Mayor offers changes to the final draft of parking lease plan

August 17, 2010

Last week, Mayor Luke Ravenstahl announced the city had released the final request for proposals (RFP) for seven pre-qualified investors to submit a final proposal on the monetizing the city's parking assets.

Following a public process, including several neighborhood public meetings, the mayor proposed changes from the draft that addresses some of the public's concerns and ensures the city still receives a significant upfront payment that will prevent a state takeover of its pension fund.

"We have addressed the concerns of residents, small business owners and council members as best as we could while still ensuring that the upfront value is generated to protect those same constituents from drastic tax increases, service cuts, or a combination of both," Mayor Ravenstahl said. "Unfortunately, we have inherited this serious problem and are now forced into a situation where doing nothing is not an option. This solution is the best solution for our city."

Among the key change resulting from the public comment period are: no enforcement citywide on Sunday; stopping meter enforcement at 6 p.m. in neighborhoods such as East Liberty, Carrick and Lawrenceville; ensuring meter rates are not increased until technology upgrades are complete; the sharing of any new advertising or retail revenue between the operator and the city; and expanding and streamlining the city's residential parking permit program.

In addition, on-street parking meter rates, which haven't been increased since 1995, will be adjusted to a lower rate in the areas of Bloomfield and Garfield near West Penn Hospital and in Carrick which borders a suburban business district.

The city needs at least a $300 million upfront payment in order to have a successful transaction that will get the pension fund above half-funded and prevent a state takeover of the city's pension fund which contains only 30 percent of its $697 million liability. In the event of a takeover, the city will be forced to pay $30 million more annually to the state. With limited options to come up with that additional payment, which is the equivalent of the entire department of public works, or the amount it costs to pay for 400 police officers, residents could face drastic tax increases, service cuts, or a combination of both.

The parking plan was proposed more than a year-and-a-half ago. In June, the mayor released the draft parking proposal to council and the public, the first time a document of that nature was publicly released before the transaction took place. In addition to three citywide public meetings, the mayor communicated with council members and many of their suggested changes are reflected in the final proposal.

According to the proposed plan, the city will continue to receive all of the parking tax and parking fine revenue and receive a portion of all new advertising/retail revenue generated. City council and the Parking Authority would be responsible for approving rate increases.

"It was my goal to give the public and council plenty of time to review this plan and offer suggestions and changes," Mayor Ravenstahl said. "Their input was valuable and many of their suggestions are reflected in the final proposal."

The city worked with its parking consultant on weighing the financial impact of the changes before releasing the final proposal.

"In order to make these improvements to the final proposal, we also had to compromise on other changes toensure that we receive an upfront value that is significant enough to shore up our pension fund and save our residents from the ramifications of a state takeover," Mr. Ravenstahl said.

Among the concessions the city had to make in order to make the public's requested changes are: expanding the non-compete zone into an area that extends further into the Golden Triangle; increasing parking enforcement; and eliminating the mandatory public parking requirement in all parking garages except for in the core of downtown.

The responses to the RFP are due Sept. 15, 2010. If the proposals of multiple investors are within 10 percent of each other, they will each have the opportunity to increase that offer as part of a Best-and-Final Offer (BAFO). This will ensure that the city receives the full potential monetary value from the proposed 50-year lease. The BAFO will take place within one week following the final proposal submission, and the highest proposal will be accepted. City Council will vote on the plan through a series of ordinances in late September.

• There will be no Sunday enforcement Citywide. The draft proposal called for meter enforcement in all neighborhoods until 10 p.m. and Sunday enforcement beginning at 1 p.m.

• The City will expand and streamline its residential parking permit program should the deal pass.

• Rates in Carrick will be lowered to 50¢/hour over the first five-years to allow competition with bordering suburban business districts. The draft proposal called for an increase of from 50¢ to $1 per hour in the first five years.

• Meters surrounding West Penn Hospital in Bloomfield will be lowered to $1.50 per hour in 2015 in comparison to the draft proposal, which called for an increase to $2 per hour in 2015. In addition, the new schedule freezes rates at 50¢ per hour until January 1, 2012

• On-street meter rates will not be increased until March 31, 2011.

• Rate cannot be increased when an on-street meter reaches $1.50/hour or more until new technology is installed.

• Concessionaire must implement technology for local businesses to provide validation or discounts for parkers at meters and parking lots.

• Any new revenues from advertising or other retail must be approved by city council and the Parking Authority, and shared between the city/authority and parking vendor.

• Areas for bicycle parking will be maintained under the agreement. Specifically, on each block there must be either an on-street meter pole that is specially equipped so that it is able to secure bicycles or a designated bicycle rack.

• The operator must have an office in Pittsburgh through the entire 50-year lease agreement.

Language added to strengthen the final proposal included:

• The operator must rehabilitate three aging downtown parking garages located at: Smithfield St. and Liberty Ave .; Ft. Duquesne Blvd. and Sixth Avenue; and Ninth and Penn Avenues. This must happen during a strict time schedule and will cost the operator approximately $50 million.

• Operator must pay all relevant taxes to the City on time or risk default.

• Bidders are required to submit a lobbyist disclosure form.

Other changes made to clarify the proposal included:

The Competing Parking Area now reflects a region in Pittsburgh's central business district directly surrounding the existing facilities.

• New parking can continue to be built in this area by private developers, the Urban Redevelopment Authority and the city/authority for use by municipal buildings such as a courthouse, police station, fire station, government administrative building, correctional facility, public school, public library, public parking or recreational facilities.

• If the city and authority build a competing public parking facility in this area, the Concessionaire must prove any damages caused to its operation before any compensation event occurs.

• This will maintain significant transient parking in the core downtown area and move monthly parking to the radius of the Central Business District.

• The composition of transient vs. monthly parkers at other facilities will depend on the market dynamics of that specific location.

The Concession Agreement now includes more specific enforcement standards for the city/authority.

• The city/authority will visit each meter on a regular basis every few hours.

• This will improve in-and-out parking and help increase revenues to the city, as the city will still receive revenue from parking fines.

• There will be a one-year ramp up period, during which the city/authority will hire additional employees to comply with the specific enforcement standards.

• During this one-year transition period, the Authority will leverage the resources of the operator to ensure standards are met at a compensation of $6 / ticket. However, after the transition is completed, the operator will be able to supplement enforcement efforts only at its own expense.

The operator will assume full responsibility for the contract with the Teamsters and related pension. Also, at the operator's cost, they will deploy current AFSCME employees for meter repair and collection and the operator will be required to interview non-union employees. Each of these employees will also have the opportunity to work at the Parking Authority or city.